INSUBCONTINENT EXCLUSIVE:
The domestic equity market saw a modest technical pullback on Wednesday, as the benchmark Nifty index ended the day with net gains of 61.60
A mildly positive start to the trade strengthened further and this resulted in the market pulling back and ending with gains
The upward move was led by short covering, but it was important as the Nifty held on to its short-term support at its 20-DMA.
We expect this
A modestly positive and quiet opening is expected
However, it should not be ignored that Nifty continues to be in a broad symmetrical triangle formation and it will continue to face pattern
resistance of the falling trend line joining the lower tops.
On Thursday, Nifty is likely to see the 10,810 and 10,840 levels play out as
important resistance while support would come in at 10,750 and 10,710.
The Relative Strength Index or RSI on the daily chart stood at
54.6358 and it remained neutral showing no divergence against price
The daily MACD has reported a negative crossover and it turned bearish even as it traded below its signal line
On the candles, a pattern resembling a Bullish Harami has emerged, which us significant as it has occurred after a corrective move
Also it has arisen from a combination of black/white candle with the white body remaining completely encompassed by the preceding black
body.
Pattern analysis showed Nifty continues to be in a broad symmetrical triangle pattern and remains susceptible to resistance coming in
from the falling trend line that which joins subsequent lower tops from 11,170 level.
As of Wednesday, Nifty validated its short-term
support area of the 20-DMA and this was followed by the 50-DMA, which remains in close vicinity
We expect the coming session to be dominated by stock-specific activities
As Nifty continues a large pattern formation, it would be prudent to keep protecting profits at higher levels until Nifty resolves the
present pattern formation on either side
While remaining highly stock specific, a cautious view is advised for the day.
STOCKS TO WATCH:Relative resilient technical setups were
observed in stocks like CG Power, Adani Power, Yes Bank, Tata Motors, Tata Steel, RIL, Reliance Capital, NHPC, Exide, Tata Power and MM
Financial.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
